HR Future: Legal Highlights | Special Edition Transposition of the Pay Transparency Directive

The Draft Bill recognises the right of job applicants to receive, prior to the date of conclusion of the employment contract, information on the initial remuneration or remuneration range, based on objective criteria, and on the relevant provisions of applicable collective bargaining instruments.

Additionally, the employer is prohibited from inquiring about applicants' remuneration history in current or previous employment relationships.

Law No 60/2018 already required a transparent remuneration policy based on the assessment of job components, using objective criteria common to men and women. The Draft Bill now requires that such remuneration policy be agreed with employees' representatives, where they exist.

It is further clarified that the criteria for job evaluation, on which the remuneration policy is based, must take into account skills, responsibility and working conditions and, where appropriate, any other relevant factors.

The Draft Bill requires employers to display or publish on the intranet the criteria used to determine remuneration, remuneration levels and pay progression for employees. Undertakings with fewer than 50 employees are exempt from the obligation regarding pay progression information.

Pay confidentiality clauses — that is, contractual clauses or provisions of collective bargaining instruments intended to prevent employees from disclosing information relating to their remuneration — shall be null and void.

Employees shall have the right to obtain information on their individual remuneration level and on the average remuneration levels, disaggregated by sex, for groups of employees performing equal work or work of equal value.

The employer must provide such information within two months of the employee's written request — or from the request made by employees' representatives or CITE, where the employee elects to request the information through those bodies. The employer is further required to inform employees annually of the existence of this right.

The Draft Bill requires undertakings with 50 or more employees (including temporary workers) to provide information disaggregated by sex on seven indicators: (i) the pay gap; (ii) the pay gap in supplementary or variable components; (iii) the median pay gap; (iv) the median pay gap in supplementary or variable components; (v) the proportion of female and male employees benefiting from supplementary or variable components; (vi) the proportion of female and male employees in each quartile of the remuneration range; and (vii) the pay gap between employees by employee’ group, disaggregated by base remuneration or salary and by supplementary or variable components.

The reporting frequency is annual for undertakings with 250 or more employees (commencing by 7 June 2027) and triennial for undertakings with 50 to 249 employees (commencing by 7 June 2027 for undertakings with 150 to 249 employees and by 7 June 2031 for undertakings with 50 to 149 employees).

Access to the information referred to in point (vii) must be made available to employees and their representatives, who may request additional clarification, to be answered by the employer within 30 days.

Where, following the annual reporting, disparities in average remuneration levels by sex are identified, the ACT – the Authority for Working Conditions shall notify the employer to, within 90 days, justify or present corrective measures. Within 45 days, the ACT shall analyse the justification or corrective measures submitted, with unjustified pay differences being presumed to be discriminatory.

In the absence of justification or corrective measures, the ACT shall notify the employer to submit, within 45 days, a joint pay assessment, with the participation of employees' representatives, where they exist. Within the same period, the employer must communicate the joint assessment to employees and their representatives.

The joint pay assessment must include: (a) An analysis of the proportion of men and women in each group of employees; (b) Information on the average remuneration levels of men and women and the respective supplementary or variable components for each group of employees; (c) Any differences in average remuneration levels between men and women in each group of employees; (d) The reasons for such differences in average remuneration levels, based on objective criteria common to men and women, if any, established by the employer or, where they exist, jointly with employees' representatives; (e) The percentage of employees of both sexes who benefited from an increase in their remuneration following their return from any parental or family assistance leave provided for in the Labour Code or the General Law on Public Employment, if such increase occurred in the relevant employee group during the period of leave; (f) The measures to be adopted to correct pay differences where they are not justified on the basis of objective criteria common to men and women; (g) An assessment of the effectiveness of the measures contained in previous joint pay assessments, where applicable.

The employer shall have 90 days to implement the measures set out in the joint pay assessment and submit to the ACT a report including information on the execution of the adopted measures and an analysis of the professional evaluation and classification systems. With these new obligations, the Remuneration Differences Assessment Plan previously provided for in Law No 60/2018 ceases to apply.

The protection against presumably abusive dismissal, already provided for in Law No 60/2018, is extended from one to three years following the submission of a complaint for breach of rights related to the principle of equal pay. A limitation period of one year following the termination of the contract is, however, established for the exercise of such rights.

In accordance with the Directive, which requires effective, proportionate and dissuasive sanctions, the following administrative offences and ancillary penalties are imposed:

• Very serious offence: breach of obligations relating to transparent remuneration policy, transparency in access to employment, reporting of information, justification of unjustified differences/submission of corrective measures and joint assessment.
• Serious offence: breach of obligations relating to access to information and communication to employees.
• Minor offence: breach of the obligation to disclose the criteria for pay-setting and progression.
• Ancillary penalties for repeat or persistent offences: revocation of tax and financial incentives and deprivation of the granting thereof, revocation of public benefits, deprivation of the right to participate in public tenders, concessions or public contracts for up to two years, and mandatory training on pay transparency.

The Draft Bill provides that, in cases of breach of a right or obligation related to the principle of equal pay, the court may award full compensation for pecuniary and non-pecuniary damages, including default interest, even without a specific claim by the applicant.

The possibility of exemption from court costs for the unsuccessful applicant is also provided for, on the basis of equity criteria.